Carolin Schramm

A review of 'unusual' SME support services

When thinking about the most pressing business development support required by business at the BoP, a prevalent view seems to be that support services for inclusive businesses must first and foremost focus on getting the business model right.  IBA, for instance, have developed a range of tools to work with businesses on core elements of their models such as value proposition, distribution model and customer segmentation.  And Noah Beckwith, argues in his recent blog that in the first instance BDS for inclusive business must 'focus on financial management, controls and planning'.

Is there a need for 'other' more 'unusual' types of support services for IB?  

The Connect to Grow programme is one such example and seeks to support growth of SMEs with impact on health and agricultural livelihoods, by facilitating innovation transfer from enterprises in India with a desire to expand internationally through business-to-business (B2B) partnership with enterprises in sub Saharan Africa and south Asia with a desire to grow. Support services provided focus on the identification of SME innovation needs as well as identification of suitable possible partners and support for joint implementation of innovative enterprise partnerships.

To help set the context for the programme, the implementation team has recently conducted a review of support services similar to Connect, that pursue SME growth as an overall objective but have a specific focus on innovation and enterprise partnership as a means to support SME growth. Our mapping illustrates some interesting findings and gaps:

  • There are countless private sector development (PSD) donor initiatives and other stakeholders that aim to support SME growth using a variety of instruments through different organisations. Many challenge funds, quasi-challenge funds, accelerators and impact investors focus specifically on SMEs that deliver social impact.
  • Most mechanisms that prioritise SME growth focus on improving access to finance. However, there is recognition that money is not enough.
  • A smaller number of programmes focus on supporting innovation or innovation transfer. These include SME support programmes, market system programmes and a few programmes dedicated to innovation transfer.
  • Programmes have an innovation focus in order to address market failures in the innovation process, to screen for likely successful entrepreneurs, to adapt market systems, or to scale impact through innovation replication. They nearly all focus on the innovator rather than the adopter of innovation.
  • A few programmes focus on, or include, support to partnering by business, Many focus on multi- stakeholder alliances and only a few on B2B partnerships. These include a focus on innovation transfer. One such example in addition to Connect is the USAID's Collaboration for Impact Facility.

For the Connect programme, our review confirms the value of supporting SME growth as an overall objective, and on innovation and enterprise partnership as a means to support SME growth. However, the review of SME growth also suggests that in order to deliver effective results from programme support, Connect needs to focus on those SMEs that already have a strong focus on client value proposition plus some existing ability to innovation and manage growth. The review of innovation transfer suggests that Connect to Grow needs to operate as one kind of 'network pathway' and assess how to provide that pathway most effectively.

Another important finding of our review is the lack of evidence on how innovation uptake happens by those adopting and adapting innovation. There is therefore little to guide the Connect team on the most likely characteristics of innovation adopters, or necessary components of successful adaptation. This also means that over the three-year pilot period lessons from Connect - a programme providing 'unusual' enterprise support services - about innovation uptake and the process of incorporating innovation into SMEs should be useful and shared with the wider market.

This blog is part of the September 2016 series on Inclusive Business Development Services, in partnership with the Inclusive Business Accelerator. Don’t miss the whole series on support available to inclusive business from practitioners, donors and intermediaries including Afrilabs, DFID, Endeva, EY and many more…